a look inside the deals
It’s no secret that big companies
are risk averse when it comes to buying products and services from
small companies. It’s also no secret that the aversion can be
overcome with hard work, good contacts, and solutions that meet
real needs. At this Netpreneur Coffee & DoughNets event held
March 25, 2003, a panel of entrepreneurs discussed how they have been able to win
those deals and gain traction for their young companies. The keys
are a sound sales process, good visibility, and finding your white
This event was hosted by the Northern
Virginia Technology Council, and sponsored by Comerica, Ernst
& Young, and Fenwick
Clark, co-founder and CEO, Métier
Kiser, Director of Mid-Atlantic Sales, Foundry
Payne, co-founder and CEO, Cigital
Schlang, President and CEO, Bantu
Smith, Partner, Qorvis
Copyright 2003 Morino
Institute. All rights reserved. Edited for length and clarity.
Statements made at Netpreneur events and recorded here reflect
solely the views of the speakers and have not been reviewed or
researched for accuracy or truthfulness. These statements in no
way reflect the opinions or beliefs of the Morino Institute,
Netpreneur.org or any of their affiliates, agents, officers, or
directors. The transcript is provided “as is” and your use is
at your own risk.
bobbie kilberg: welcome
morning. My name is
Bobbie Kilberg and I am President of the
Virginia Technology Council (NVTC).
We are very, very pleased to see you here this morning.
NVTC, the Technology
Council of Maryland, the
DC Technology Council, and Virginia's Center
for Innovative Technology are all very committed to seeing that Coffee & DoughNets continues
as a vibrant gathering, and I think the turnout this morning shows
that it definitely is. We think it's important to do this.
Before we begin
our panel discussion, I want to tell you quickly about an NVTC
program that may be particularly relevant to your businesses.
The program is our CEO
Team Solutions, a business advisory service that offers young
companies the opportunity to have an intense—and I stress intense—three-hour
session with a panel of senior advisors on a topic or topics of
your choosing. Esther Smith is one of those advisors.
Our list of advisors includes leading experts in everything
from business development and marketing to legal, human resources,
and financial advice. In addition, CEO Team Solutions has recently added a company
mentoring program which is co-sponsored by Virginia's Center for
pleased to announce the formation of a new entrepreneur’s
committee which will build on NVTC's current activities for
emerging growth companies. The
committee will focus on identifying areas of need within the
entrepreneurial community and develop services, resources, and
programs to assist with those needs.
Anybody who is interested in joining that new committee,
please stop by our membership booth on the way out.
When you stop there, you will discover that we are pleased
to say that NVTC will be offering a complimentary six-month
membership to entrepreneurs here this morning who are new to NVTC.
This will provide you and others in your company with
access to valuable benefits of membership, including CEO Team
Solutions, our BeneNet and RiskNet affinity programs for insurance
and employee benefits, plus all of our networking and educational
events that involve the entire council membership, as well as the
events and activities of our 18 committees and their 17
those of you who are based in DC and Maryland, we strongly
encourage you to join the Technology Council of Maryland and the
DC Tech Council. We
all work together closely and cooperatively, and we plan to work
with all of you on a continuing basis.
this morning is entitled “Early Stage Sales,” and we have a
knowledgeable panel of experts on this topic.
I am pleased to introduce our moderator, Esther
Smith, who is a member of NVTC's board of directors and
Partner of Qorvis Communications,
who will moderate the panel and introduce the participants.
esther smith: introductions
It's nice to look out over an audience of survivors.
It is 2003, it's spring, and we have a great panel this
One of the most
interesting things you will find today is the market synergy that
is finally emerging in Washington between what had previously been
known as “commercial technology” companies and companies that
do government business. All
of these companies are very entrepreneurial, all of them are small
but growing—all except for Foundry—and you will find some real
lessons in having the value of the biggest IT customer in the
world, the federal government, sitting there next door.
we're going to start with Jeff Payne.
jeff payne: a well-defined process
you, Esther. Good
morning, everyone. To
give you a little background on Cigital,
we make software behave. Our
business is helping customers with reliability and security issues
for their software applications, whether they're buying those
applications, building, or integrating them.
We help analyze software to make sure it works, then we work
with business executives to figure out how to improve their
software development processes, make their organization more
efficient, and make better decisions around when they should
release software, who they should buy software from, and how you
control a software development vendor that you have hired.
Today I'm going
to talk about two things. One
is our sales process, because we have a very defined sales process
that we follow, and then I'm going to walk through a case study of the
use of that sales process and how it resulted in some business for
us this year. I'll
also give you a couple of lessons learned and answer any questions
you might have at the end of the panel.
We have a
defined sales process, and it's really a sales and marketing
process. I believe
very strongly that those two functions have to be very well
integrated from a lead generation and sales perspective.
The process goes as follows: We target, we penetrate, we
qualify, we define, we scope, we close, we farm.
What do I mean
by those things?
of course, is about figuring out whom you want to sell to within
the organization, what kinds of organizations, where you've had
success, and where you want to focus the messages that you feel
will have the most impact. I'm
a big believer in targeting.
As a small company you can't go after everybody, you've got
to figure out who is going to buy, then you've got to get in front
is about getting in front of the right person in those
organizations through lead generation, marketing campaigns, and
other things you can do to get to the right customer.
The goal in lead generation is to get what we call a
“first date,” which is a qualification meeting.
When we go into an organization, the first and foremost
thing we do when we qualify a customer is listen to their
problems and needs. We're big believers that in sales, first you have to
understand what the customer needs, not tell them what you
have to sell. That’s
because you're going to tailor your solution, even if it's a
product, to the needs they have.
We go in, we
listen to the customer, and we try to understand what they need
and where the pain is in the organization.
Where are the problems and the issues that they have to
deal with? Then we
tell them about Cigital, because most of them haven't heard of us.
We spend a little bit of time on our corporate capabilities
and the types of things we do for our customers.
The goal in that meeting is to identify a couple of pain
points or need points that the customer has and for which Cigital
has a solution so that we can sell into that customer.
The goal is then to introduce those ideas to the customer,
get them bought into the idea of seeing whether it fits into their
organization, and setting up a follow-on meeting to dig into
detail on the definition of exactly what this solution is, how it
fits into their organization, and how it can help.
To show them the benefit of what Cigital brings to their
We then move
into the definition stage, which is digging down into the
solutions we have to provide, the technology we have, the processes
we follow, and the things we do. We get
them behind the idea that we have something that fits into the
qualify budget and so forth, and get it honed down to what we
think the customer will actually buy.
Then we ask them something that I think is critical in the
sales cycle—we ask them to put time and effort into the rest of
the process. I'm a
big believer in this because this separates the people who are
just meeting with you because they don't have anything else to do
from the people who are actually serious about buying something.
Before we move into what we call our scoping phase,
which is where we're going to put a lot of time and effort into
configuring our offering for this particular customer, we ask them
to be part of it in what we call a “workout,” where we sit
down with the customer—it's usually a half-day or a day in
length—with a team of their people, a team of our people, and we
dig through the specifics to figure out how we're going to work
together. If the
customer will not do that with us, we won't do business with them
because we know they're not going to do business with us.
We're not going to spend the resources.
During scoping we’re exploring the specifics of our
technology, how and where it is going to apply in their
organization, what the ROI is going to be, exactly how they're
going to use it, what the deliverables might be, and what they're
going to buy. Out of scoping comes, ideally, a trial proposal that they
have pretty much already bought off on, and they've agreed that
this is something they need, they have budget for it, and they
agree with the tasks, so now it's just an issue of terms and
price. We're big
believers that you sell the car, you don't sell the price, so you
get the customer to buy what you have that they need, and you
qualify their budget, but you don't focus on the price and the
terms of the deal until after they've decided this is the car they
want to buy.
Then we move
into what we call the close piece, which, if done properly,
should just be about the terms of the deal, including the
licensing, maintenance, consulting, and professional service
aspects of what they're buying.
What's the price? What
do they get for the money? What's
the ROI? How do we sell it to the decision-maker and how do we get
this thing closed?
For us, it
doesn't stop there. One of my key lessons learned, is that the easiest customer
is the existing customer. In
your sales process, you've got to figure out how to take advantage
of your existing customers, both to get more business out of them
and to get to other people they know.
So our seventh step is what we call farming, which
is why we have a dedicated account management force that moves in
during the sales process, takes over the sales process, helps
close the deal, then stays around to make sure the project is a
success, that the technology is used, and to make sure that if
additional needs and wants are identified, we take advantage of it
to get more business.
Let me give you
an example of how this works.
Late last year,
the good news and the bad scenario was when marketing came to me
and said, “We have a great opportunity to get in front of 200
CIOs who all have a budget of over $100 million to spend in 2003,
and 35 to 50 of them are in our target market.”
“That's great. Where
do I go?”
well, now that is the bad news.
You've got to sponsor this CIO conference, and it's going
to cost around $75,000, plus probably $25,000 to get everything we
need in place to go out and do it.”
Based on the
target focus we're talking about, we spent time looking at who
would attend this conference and where the target market was.
Our analysis was that to get in front of those 35 or 50
people would probably cost that much money anyway.
Our sale isn't a shrink-wrapped, out-of-the-box tool that
sells for $1,000. Our
typical engagement in the first round is a couple of hundred
thousand dollars, and our goal is to get $1 million out of a
client a year. We
don't need thousands of clients, we need five to 10 new clients a
year spending a million dollars with us and we're growing very
nicely. So for us, 35
or 50 targeted market opportunities is a pretty nice number in one
Based on that,
we decided to do it, but we decided to go in with a plan.
We put together a campaign to aggressively attack this
conference before it started, during it, and after it.
We put together direct mail, we made calls, we divvied up
the names of people that were going to the conference that we
wanted to target, and
we aggressively contacted these people before the conference even
started in order to introduce Cigital and get the ball rolling.
Of all that we
got out of the conference, by far the most important was the
speaking opportunity. It
was the chance for me to get up and not talk about Cigital,
but to talk about something that would draw an audience into
hearing about Cigital indirectly.
We crafted a message that we thought would play to this
audience, and we selected a fun giveaway, a flash drive.
If you haven’t seen these things, they’re tiny disk drives that hang on your key chain and can hold
many megabytes of data.
They're cool. We
put our logo on them, we put my presentation on them, we put our
corporate capabilities on them, and we told everybody we called
before the conference that if they came they’d get one for free
if they dropped a card into a basket.
The typical turnout for these types of presentations is 35
people; we had about 75 in our session.
I know that they were all there for the key drive, not to
hear me speak, but what came out of it, interestingly enough, was
that someone who wasn't even on our target list, who we didn't
know was coming to the conference, the CIO for a very large, very
well-known, very controversial financial services organization
that I cannot name—although, hopefully, we're going to do a
press release in the next few months and you'll figure out who it
is. They were building something mission critical.
He came up after the talk and said, “I love what you have
to say. I need a lot
of help, here's my card, call me tomorrow.”
A great lead, right?
The next day we
called the gentleman and within a week we had a first meeting with
him. We expected it
to be a qualification meeting, but it actually skipped through
three steps in our process in one day.
Based on what he heard me say, he knew exactly what he
needed and told me what he wanted.
Interestingly, through discovery we learned about something
else he needed which we also subsequently sold him as well.
He wanted to get something worked out and in process within
a week so that we could get going on a project that he had looming
and needed help on. All of this happened a week or so after the conference, and,
in less than a month, we closed the deal, the first phase of which
was $300,000 and which I estimate will probably be about $1
million by the end of this year or so.
We're now in that account, farming it, doing what we do.
That's an example of how this process works.
A couple of key
lessons learned: First, you have to have the defined sales process
with defined steps in it and defined criteria that you can sell
against. As a CEO, I
need that to make sure that we're actually making progress and
that sales isn't sandbagging me—which they've been known to
do—and so that we can predict revenue.
Second, I'm a big believer that you don't rush to proposal,
you make a customer work to it with you.
If they're not willing to work with you, they're probably
not going to work with you anyway.
Ms. Smith: Thanks so much, Jeff.
I want to come back later in the discussion to the role of
the account manager, including how you fund and manage it.
The next person to speak is Larry Schlang from Bantu.